Tag Archives: stats

Merger filings still dither, but YTD numbers now tentatively promise to exceed FY2015

Making sense of the COMESA Competition Commission’s merger notification site is no easy undertaking. The perplexing nature of its case-numbering system mirrors perhaps only the level of confusion surrounding the CCC’s original merger threshold and notification-fee guidelines (e.g., see here on that topic).

As we pointed out here, the merger statistics (as they had been released as of January 2016) for 2015 were disappointingly low. In today’s post, please note that we are upgrading those numbers, however, to reflect additional material now made available on the official CCC web resource, reflecting 3 additional filings, bringing the year-end total for FY2015 to 18. Three of those were “Phase 2” cases. In addition, according to the CCC, there were 3 supplemental cases in which “Comfort Letters” were issued to the parties.

For year-to-date 2016 statistics, the numbers look analogous, albeit somewhat higher than the 2015 slump — that is to say, still diminished from the 2013-2014 height of COMESA ‘mergermania’, during which (mostly international) counsel took the confusion surrounding the CCC notification thresholds to heart and erred on the side of caution (and more fees), advising clients to notify rather than not to (65 in the 2 years), or to seek Comfort Letters, which also were issued in record numbers (19 total for the 2-year period)… With that said, the agency is now up to 16 merger cases, with 2 Second-Phase matters on deck.

Number of merger notifications based on CCC-published notices (using educated inferences where the original CCC case numbers, dates and/or descriptions lack intelligibility; note that 2013-14 statistics only reflect actual filings made available online and not the official statistics issued by the CCC of 21 and 43, respectively) (c) AfricanAntitrust.com

Going from 44 notifications in 2014 to 15 filings last year, the Competition Commission of the COMESA common-market area has seen a dramatic decline in merger filings.

“These statistics are akin to the agency’s inaugural year — a slump that can only be explained by one of two likely underlying rationales:

A. Stargard

(1) Potential filers have begun to follow widespread advice from legal counsel that effectively admonishes would-be notifying parties not to do so until COMESA establishes a more robust enforcement and notification regime; or (2) — and this is the CCC’s preferred official explanation — the increased filing thresholds as of March 2015 caused fewer transactions to be caught in the mandatory filing net of the regulator.”

Of further concern, Stargard notes, is that the supporting merger documents made available by the CCC do not reflect the purported official statistics. This fact is reflected in the MergerMania article published on AAT last August.. “For each and every one of the 15 filings identified by the Commission in its official statement, we should be able to see the underlying SOM [statement of merger] and the concomitant Decision — ideally published contemporaneously with the occurrence of each relevant event,” he says. “Unfortunately, on the CCC merger site, two merger filings are missing entirely (numbers 9 and 10), and the others are commonly published many months after the public-comment deadline for the transactions has long expired.”

To date, a parsing of the (available) 2015 statistics shows that 3 of 15 cases actually went into Phase Two review, Stargard observes. “This would generally imply a more serious concern raised by the authority in terms of the effect on competition post-merger. Here, however, it is quite unclear what the potential threat to competition in, for example, a purely private-equity deal would be. The official decision (no. 15, from November 2015) fails to even hint at a possible threat — as one would commonly expect from a PE to PE transaction, which usually raises little to no antitrust eyebrows…”

Our updated AAT COMESA MergerManiastatistics are therefore as follows (again noting the fact that AAT bases its count on only the official, published and available merger documents, instead of relying on mere press release-based summaries published by the CCC). We also note that to date, 2016 has seen one “merger inquiry notice,” namely of the Dutch Yara / Zambian Greenbeltfertiliser deal. The public-comment period for that transaction expires on January 22, 2016.

Number of merger notifications based on CCC-published notices

The full text of the COMESA release follows below:

During the year 2015, the Commission assessed and cleared 15 merger transactions. The transactions involved sectors such as insurance, food additives, water treatment, agro-chemical, banking, telecommunication, non alcohol-ic beverage, publishing, packaging and retail. The Commission handled 12 merger notifications in the year 2013 and 44 merger notifications in the year 2014. The Pie Chart below shows the number of mergers handled by the Commission from inception to date.

As shown in the pie chart the Commission dealt with more mergers in 2014 as compared to 2013 but this trend has gone down in 2015. This trend may be attributed to the supposition that in 2013, the Commission had just commenced operations and therefore some stakeholders were not immediately aware of its existence and operations. By 2014, most stake-holders had become aware of the Commission and its operations, hence the significant increase in the number of mergers notified. The significant reduction in 2015 can be attributed to the supposition that the merger notification thresholds approved by the Council of Ministers on 26 March 2015 which has resulted in smaller mergers escaping the notification. Before 26 March 2015, the merger notification thresholds were Zero hence all mergers were notifiable regardless of size.

COMESA Merger Mania

To answer our rhetorical question in the title above: We don’t believe so. For the merger junkies among our readership, here is AAT’s latest instalment of “COMESA MergerMania” — AfricanAntitrust’s occasional look at merger matters reviewed by the young multi-jurisdictional competition enforcers in south/eastern Africa. (To see our last post on COMESA merger statistics, click here).

As nobody else seems to be doing this, let us compile the latest news in merger notifications to the COMESA Competition Commission. Prior to doing so, however, we observe one item of utility and basic house-keeping etiquette, which we hope will be heeded in future official releases by the agency: Please note the dates of (and on the) documents being issued. Using the date as a ‘case ID’ is insufficient in our view — the CCC’s current PDF pronouncements invariably remain un-dated, a practice which AAT deplores and which simply does not conform to international business (or government) standards. So: please date your press releases, opinions, decisions, and notifications on the documents themselves.

We observe that the matters below have not yet been assigned final “case numbers” (at least not publicly) in the style typical of the CCC decisions in the past, namely sequential numbers per year, as they are currently under investigation and have not yet been decided.

We also note that one notification in particular appears to have been retroactively made in 2014, even though it is identified as merger no. 3 of 2015 (Gateway), a peculiarity we cannot currently explain. Likewise, AAT wonders what the “44” stands for in its case ID (“12/44/2014”), we surmise it’s a typo and should be “14” instead.

The record time — 11 calendar days — in which the CCC resolved the Telkom transaction in favor of the South African provider, which aquired a BBBEE entity, despite the fact that the affected geographies encompassed 10 COMESA member states.

The average time it took for the CCC to clear these 5 transactions was 120 days from notification to decision.

Swaziland Competition Commission all but shuttering its doors

Since the creation of its competition-law authority in 2007, COMESA member state Swaziland has seen only 2 (two) enforcement matters, according to a report by the Observer. Even by COMESA’s statistical standards, 2 matters in 7 years amounts to a record low.

Over in the virtual world, the SCC’s web site reflects the agency’s real-life inactivity: The last update appears to have been made in March 2012, a full two years ago; many, if not most, hyperlinks to “news” are broken or lead the viewer to blank pages; PDF document downloads often fail for no obvious reason.

As to the two discernible cases undertaken by the agency, the Observer article quotes Swaziland Competition Commission (SCC) Advocacy and Communications Officer Mancoba Mabuza as follows:

[T]he first enforcement matter the commission dealt with was The Gables (Pty) Ltd versus Pick n Pay Retailers (Pty) Ltd where the secretariat conducted an investigation into allegations made by The Gables against Pick n Pay.

[T]he second enforcement case involved Eagles Nest (Pty) Ltd and Usuthu Poultry (Pty) Ltd which was investigated by the secretariat and at the conclusion of the investigation; the report was shared with the parties to the matter as the finding was adverse to the parties.

“The matter was then taken to court where the commission successfully defended the case in the court of first instance and the parties then appealed the matter. In a judgement delivered on May 30, the parties’ appeal was dismissed and that the commission will be adjudicating on this matter soon,” he said.

Combine Point 4 above (low filing statistics) with the zero-threshold and low nexus requirements that trigger a COMESA merger notification, and the following question inevitably comes to mind: With such low thresholds, and the certain existence of commercial deal activity going on in the COMESA zone, why are there so few notifications?

Well, the young agency’s stats have picked up some steam in 2014, it would seem: based on a review of its online document repository, the CC has received a whopping three notifications in January alone. They are, in chronological order:

Activity has increased dramatically. Is it a coincidence & a statistically irrelevant blip on the radar screen? This remains to be seen. The parties are – unlike last year’s – not “repeat parties” and therefore the increase in notifications seems to be natural/organic growth, if you will, rather than a case of the same bear falling into the same honey-trap multiple times…

The Competition Commission has listened to its critics (including this blog). Notably, the CC now clearly identifies the affected member-state jurisdictions in the published notice – a commendable practice that it did not follow in all previous instances, and which AAT welcomes.

Post-scriptum: Adding up the total 2013 tally of notifications, the Tractor & Grader Supplies Ltd / Torre Industrial Holdingstransaction (notified after our prior statistics post in November 2013) brought the sum-total of COMESA merger filings to 11 for FY2013.

It’s been a little while since we last published a note on COMESA. When there is little substantive news to report, statistics often yield a topic to write about. And so it is with COMESA. The statistic at hand: On Monday, 18. November 2013, the Competition Commission announced that it had received its tenth merger notification.

Here are a few observations on the deal (Total Egypt LLC/Chevron Egypt SAE & Total/Beltone Capital Holdings) that spring to mind:

Geography: While the recitals fail to mention any common-market dimension of the transaction, it seems to be centered on COMESA member state Egypt.On the face of it, this appears to be an Egyptian deal, and as we have become accustomed to, it is hard to infer from the published information what the nexus to the common market is.

Repeat party: The notified deal involves a repeat customer of the CCC, namely the oil & energy company Total. A different Total subsidiary had filed for (and has since obtained) approval of another transaction in March: the previous Total/Shell deal, also centered on Egypt, was notified in July. To our knowledge, Total is the first repeat COMESA-notifying party in the CCC’s history. This may well be a positive sign for the CCC.

Two-for-One, please! The CCC observes in its November 18th notice that it actually received one single notification for de facto two transactions: the Chevron and the Beltone deal.But the parties were quick to point out – smartly so, some would say – that the deals were closely “interrelated” and therefore should be treated as one transaction for purposes of COMESA review. Bottom line: only one notification = only one merger filing fee (!) to pay, which can, as we know, easily hit the half-million dollar mark. In the end, the CCC bought the argument and allowed the parties to make only one single notification.

Overall statistics: 11 months and 10 merger notifications. That equals less than 1 filing per month. With such a low number, the CCC is certainly not on track to beat other young competition-law enforcers’ merger stats (such as India’s Competition Commission, which has received an average of over 5 notifications per month since its inception two years ago).

Flying under the radar: Combine Point 4 above (low filing statistics) with the zero-threshold and low nexus requirements that trigger a COMESA merger notification, and the following question inevitably comes to mind: With such low thresholds, and the certain existence of commercial deal activity going on in the COMESA zone, why are there so few notifications? Are parties simply ignoring the notification mandate? And if so, what is the CCC — an enforcement agency, after all — doing about this?

Cute or lax? As with other official documents on the CCC’s web site, even this mere 2-pager contains what appears to be an unintended inclusion of internal CCC notes that the agency failed to delete prior to publication. It reads as follows: “[these abbreviations are not explained anywhere above].” Someone forgot to review the [short] notice, which has been up for 3 days now, and which does diminish the appearance of professionalism. More importantly, it calls into question the ability of the agency to edit its own documents carefully, redact properly, and thus its capability to maintain the confidentiality of party or non-party submissions.Quoth the Raven: “I wish to assure you that all the information you will make available to the Commission shall be treated with the strictest confidentiality and will only be used for the purpose of this inquiry,” as the standard closing CCC paragraph goes…

In conclusion, the most important practical tip for parties contemplating deals in the COMESA region is perhaps the upshot of Point 3 above: Get a package deal! There is now precedent that the CCC permits such combined notifications, which should allow parties to wrap multiple transactions into one lower-cost filing, thereby avoiding what I am calling in an upcoming article the CCC’s “(Pricey) Tollbooth on the African Merger Interstate“…